Flat taxes: good for the poor

If my previous post was a bit harsh on the Adam Smith Institute, here's a payback - more evidence that flat taxes can be good for the poor and for the whole economy:

We quantify the aggregate, distributional and welfare consequences of two revenue neutral flat-tax reforms using a model economy that replicates the U.S. distributions of earnings, income and wealth...In both flat-tax reforms the income poor pay less income taxes and obtain sizeable welfare gains...Economic folklore has defended progressive taxation on the grounds that it is good for the poor: we find that flat taxes can be better.

There's just one problem - the more egalitarian flat-tax reform would cut output a little. But hey, there are alway trade-offs.
A reminder: Here's research (pdf) showing how a flat tax would affect the Spanish economy. Here's something I said about the link between flat taxes and equality.

Comments

[dearieme]

Since the political Left pimps off the poor, it certainly doesn't want to take the risk of a self-conscious poor escaping poverty. Otherwise it might need to import a New Poor. Oh.

[dsquared]

[Economic folklore has defended progressive taxation on the grounds that it is good for the poor: we find that flat taxes can be better]

This is a strange sentence; it implies that the authors have shown that there is a flat tax system which is more progressive than any non-flat system. And of course they haven't because that's self-evidently mathematically impossible.

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